In this article, we discuss the top 10 stock picks of activist billionaire Paul Singer in 2023. If you want to see more stocks in this selection, check out Activist Billionaire Paul Singer 2023 Portfolio: Top 5 Stock Picks.
Billionaire and activist investor Paul Singer, who heads Elliott Management, is growing bearish on the financial markets. A Wall Street Journal report recently quoted the billionaire, who cautioned investors about an extended period of diminished profits in financial assets due to escalating concerns of a recession. Singer expressed his belief that the US economy is currently navigating through an exceptionally hazardous and bewildering phase. He explained:
“Valuations are still very high. There’s a significant chance of recession. We see the possibility of a lengthy period of low returns in financial assets, low returns in real estate, corporate profits, unemployment rates higher than exist now and lots of inflation in the next round.”
Paul Singer was among the early individuals to anticipate and alert about the subprime mortgage crisis in 2008, and he also raised concerns about elevated inflation at the onset of the COVID-19 pandemic. According to WSJ, in a letter addressed to investors in April 2020, Singer wrote:
“We think it is very unlikely that central bankers will move to normalize monetary policy after the current emergency is over. They did not normalize last time and the world has moved demonstrably closer to a tipping point after which money printing, prices and the growth of debt are in an upward spiral that the monetary authorities realize cannot be broken except at the cost of a deep recession and credit collapse.”
Singer, known for his high-profile conflict with Argentina regarding its defaulted debt, holds a critical stance towards comprehensive banking regulations, such as those outlined in the Dodd-Frank Act of 2010, as well as prolonged market interventions by global central banks following the 2008 global financial crisis. He also stressed his lack of enthusiasm for cryptocurrencies, describing them as “completely devoid of any value” during his interview with the Wall Street Journal. He added:
“There are thousands of cryptocurrencies. That’s why they’re worth zero. Anybody can make one. All they are is nothing with a marketing pitch—literally nothing.”
Bloomberg noted that Elliott Management achieved its largest-ever capital raise in 2022, totaling $13 billion. Employing a drawdown approach, Elliott secures commitments from investors, but the actual cash is called upon at a later date. Since its establishment in 1977, the hedge fund has experienced losses in only two years.
In this article, we discuss the activist billionaire’s top 10 stock picks as of March end, which include Howmet Aerospace Inc. (NYSE:HWM), Pinterest, Inc. (NYSE:PINS), and Marathon Petroleum Corporation (NYSE:MPC).
Our Methodology
For this list, we selected top 10 stocks from the Q1 2023 13F portfolio of Paul Singer’s Elliott Management. The stocks are ranked in ascending order of their stake value.
Paul Singer of Elliott Management
Activist Billionaire Paul Singer 2023 Portfolio: Top Stock Picks
10. E2open Parent Holdings, Inc. (NYSE:ETWO)
Elliott Management’s Stake Value: $111,542,168
Number of Hedge Fund Holders: 24
E2open Parent Holdings, Inc. (NYSE:ETWO) offers a software platform for managing and coordinating supply chains, which operates on the cloud and covers the entire process from start to finish. In Q1 2023, Paul Singer’s Elliott Management owned 19.16 million shares of E2open Parent Holdings, Inc. (NYSE:ETWO) worth $111.5 million, representing 0.82% of the total 13F securities.
On May 2, Credit Suisse upgraded E2open Parent Holdings, Inc. (NYSE:ETWO) to Neutral from Underperform with a price target of $5, down from $5.50. The firm mentioned that the company’s guidance for organic revenue growth in FY24 is 1.6%, which takes into account a slow first half of the year due to integration challenges and macro-related churn. However, they expect the situation to stabilize in the second half. The firm noted that although they would have preferred a more cautious approach, they believe E2open Parent Holdings, Inc. (NYSE:ETWO) has enough demand in its sales pipeline to meet the revenue target for the entire year. Credit Suisse further stated that the company’s increased focus on organic growth, the adjusted guidance, and the current valuation all contribute to a more balanced outlook for the company’s shares in the next 12 months.
According to Insider Monkey’s fourth quarter database, 24 hedge funds were bullish on E2open Parent Holdings, Inc. (NYSE:ETWO), compared to 23 funds in the prior quarter. Snehal Amin’s Windacre Partnership is the largest stakeholder of the company.
Like Howmet Aerospace Inc. (NYSE:HWM), Pinterest, Inc. (NYSE:PINS), and Marathon Petroleum Corporation (NYSE:MPC), E2open Parent Holdings, Inc. (NYSE:ETWO) is one of the top stock picks of activist billionaire Paul Singer.
Here is what Baron Small Cap Fund has to say aboutE2open Parent Holdings, Inc. (NYSE:ETWO) in its Q1 2021 investor letter:
“E2open Inc. provides a 100% cloud-based software platform to orchestrate complex global supply chains. Its end-to-end SaaS solutions are mission critical. They drive compelling value and ROI for a diverse, blue-chip customer base (including Dell, Peloton, and Boeing) by helping them optimize their supply chains across channel shaping, demand sensing, business planning, logistics, global trade, and supply management.
The market for supply chain management is large ($45 billion-plus market) and has only increased in complexity and importance due to the COVID pandemic. E2open’s deeply embedded products enable strong retention (107% net retention) and long customer relationships (top 100 customers have a 14-year average tenure). Relative to the competition, E2open has devised an elegant and simple solution that is faster and nimbler compared to legacy ERP vendors, and its single interface for all participants compares favorably to the many point solutions out in the market.
E2open is poised to accelerate its organic revenue growth to about 10% in the upcoming fiscal year and maintain a low double-digit level over the medium term. Due to long-term contracts, the company has high visibility into future annual growth, and we expect acceleration will be driven by several factors, including expanding existing customer relationships ($1 billion white space alone), winning new customers, optimizing the sales force, getting better pricing realization, and enhancing strategic partnerships. Acquisitions are expected to be the primary use of free cash flow and should supplement the organic growth and provide meaningful synergies once integrated into E2open’s platform. The company has an attractive margin profile (low 30% increasing to high 30%’s adjusted EBITDA margins) paired with strong FCF generation. We believe that E2open will be a steady earnings compounder, which should drive solid returns for the stock over a multi-year period.”
9. Noble Corporation Plc (NYSE:NE)
Elliott Management’s Stake Value: $112,489,500
Number of Hedge Fund Holders: 45
Noble Corporation Plc (NYSE:NE) is an offshore drilling contractor that serves the oil and gas industry. The company offers contract drilling services worldwide using its fleet of mobile offshore drilling units. Securities filings for the first quarter of 2023 reveal that Paul Singer’s hedge fund held 2.85 million shares of Noble Corporation Plc (NYSE:NE), worth $112.4 million and representing 0.83% of the total portfolio.
On May 4, Noble Corporation Plc (NYSE:NE) reported a Q1 non-GAAP EPS of $0.19 and a revenue of $610 million, outperforming Wall Street estimates by $0.08 and $73 million, respectively. Noble Corporation Plc (NYSE:NE) maintained its previously communicated guidance for the full year of 2023. The company expects total revenue to fall within the range of $2.35 billion to $2.55 billion, with a consensus estimate of $2.42 billion. Noble also anticipates adjusted EBITDA to be in the range of $725 million to $825 million and capital expenditures to be between $325 million and $365 million.
According to Insider Monkey’s first quarter database, 45 hedge funds were long Noble Corporation Plc (NYSE:NE), compared to 50 funds in the prior quarter. William B. Gray’s Orbis Investment Management is the biggest stakeholder of the company, with 3.45 million shares worth $136.4 million.
ClearBridge Value Equity Strategy made the following comment about Noble Corporation Plc (NYSE:NE) in its Q4 2022 investor letter:
“As mentioned, we remain very positive on energy given the structural global shortage. However, with the cost structure of shale rising from higher services costs and well productivity falling, we made the decision to pivot from shorter-cycle shale production to longer-cycle conventional oil. We believe the current environment suggests that pricing power in energy services will continue to improve while the demand for offshore oil will increase. We invested in Noble Corporation Plc (NYSE:NE), in the energy sector, an offshore drilling contractor that targets ultra-deepwater and high-specification jackup markets, which we believe will be a major beneficiary of this shift. After emerging from bankruptcy caused by the recent severe downcycle, Noble has a recapitalized balance sheet moving into a positive pricing cycle that will drive dramatic growth in earnings and free cash flow. Like other parts of energy, the nightmare of the last cycle is reinforcing capital discipline and a focus on free cash flow rather than growth. We believe this subsequent longer duration cycle is not reflected in Noble’s current stock price, and long-term performance will be supported by growing shareholder returns from dividends and buybacks while maintaining a strong balance sheet.”
8. Valaris Limited (NYSE:VAL)
Elliott Management’s Stake Value: $128,168,200
Number of Hedge Fund Holders: 47
Valaris Limited (NYSE:VAL) offers offshore contract drilling services to the global oil and gas industry. The company possesses a fleet of offshore drilling rigs, comprising drillships, dynamically positioned semi-submersible rigs, moored semi-submersible rigs, and jackup rigs. In Q1 2023, Paul Singer’s Elliott Management held 1.97 million shares of Valaris Limited (NYSE:VAL), worth $128.16 million and representing 0.94% of the total portfolio. While it is one of the top stock picks of Singer, he shed 43% of his stake in Q1.
On May 5, Barclays analyst Edward Kim maintained an Equal Weight rating on Valaris Limited (NYSE:VAL) and lowered the firm’s price target on the shares to $80 from $82 following the Q1 results.
According to Insider Monkey’s first quarter database, 47 hedge funds were bullish on Valaris Limited (NYSE:VAL), compared to 48 funds in the prior quarter. Stephen Mandel’s Lone Pine Capital is a prominent stakeholder of the company, with 1.91 million shares worth $124.4 million.
7. Cardinal Health, Inc. (NYSE:CAH)
Elliott Management’s Stake Value: $151,000,000
Number of Hedge Fund Holders: 50
Cardinal Health, Inc. (NYSE:CAH) is a healthcare services company that offers integrated and comprehensive healthcare solutions to hospitals, healthcare systems, pharmacies, ambulatory surgery centers, clinical laboratories, and patients in their homes. In Q1 2023, Paul Singer’s hedge fund held 2 million shares of Cardinal Health, Inc. (NYSE:CAH), worth $151 million. It is one of the top stock picks of the activist billionaire.
On May 11, Cardinal Health, Inc. (NYSE:CAH) declared a $0.5006 per share quarterly dividend, a 1% increase from its prior dividend of $0.4957. The dividend is payable on July 15, to shareholders of record on July 3.
According to Insider Monkey’s first quarter database, 50 hedge funds were long Cardinal Health, Inc. (NYSE:CAH), and Ken Griffin’s Citadel Investment Group is the largest stakeholder of the company, with 2.7 million shares worth $206.6 million.
Ariel Investment made the following comment about Cardinal Health, Inc. (NYSE:CAH) in its Q3 2022 investor letter:
“Additionally, distributor of pharmaceutical and medical products Cardinal Health, Inc. (NYSE:CAH) advanced in the period as leadership changes were viewed to be positive for shares. Management provided a new profit outlook for Fiscal 2023 and announced an improvement plan for the medical segment. We are encouraged by these changes and think CAH’s underlying fundamentals and competitive advantages around preventative maintenance screenings and medication management will continue to improve. We believe valuations of healthcare companies like CAH that focus on cost optimization and promote technological efficiency across the supply chain will be rewarded over the long term.”
6. Suncor Energy Inc. (NYSE:SU)
Elliott Management’s Stake Value: $310,205,892
Number of Hedge Fund Holders: 45
Suncor Energy Inc. (NYSE:SU) is a Canadian energy company that operates in both domestic and international markets. The company is divided into three main segments – Oil Sands, Exploration and Production, and Refining and Marketing. In the first quarter of 2023, Paul Singer’s Elliott Management owned 10 million Suncor Energy Inc. (NYSE:SU) shares, worth $310.20 million and representing 2.29% of the total 13F portfolio.
On May 9, Suncor Energy Inc. (NYSE:SU) declared a C$0.52 per share quarterly dividend, in line with previous. The dividend is payable on June 26, to shareholders of record on June 5.
RBC Capital analyst Greg Pardy maintained an Outperform rating on Suncor Energy Inc. (NYSE:SU) but lowered the firm’s price target on the shares to C$52 from C$54 on May 10.
According to Insider Monkey’s first quarter database, 45 hedge funds were long Suncor Energy Inc. (NYSE:SU), compared to 47 funds in the prior quarter. Lyrical Asset Management is a significant stakeholder of the company, with 5.8 million shares worth $247 million.
In addition to Howmet Aerospace Inc. (NYSE:HWM), Pinterest, Inc. (NYSE:PINS), and Marathon Petroleum Corporation (NYSE:MPC), Suncor Energy Inc. (NYSE:SU) is one of the top stock picks of Paul Singer.
Artisan International Value Fund made the following comment about Suncor Energy Inc. (NYSE:SU) in its Q4 2022 investor letter:
“Suncor Energy Inc. (NYSE:SU), a Canada-based operator of oil sands mines, refineries and retail gas stations, was the third-largest contributor to return for the year, mainly due to higher oil prices. The share price increased by one third. Notably, the portfolio generated significant returns from energy stocks, including Suncor, Tenaris, Imperial Oil and tangentially Alimentation Couche-Tarde and Seven & i Holdings, both of which are in the gas station business. Given the cyclicality and commodity nature of the oil business, we have sold shares of these investments, including the complete sale of both Tenaris and Imperial Oil.”
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Disclosure: None. Activist Billionaire Paul Singer 2023 Portfolio: Top 10 Stock Picks is originally published on Insider Monkey.